Tuesday, June 18, 2013

Mankiw on the 1%

Greg Mankiw has an intereting new article draft, titled "Defending the 1%" It's mistitled really, as the main point I got out of it is the more interesting question, "Can transfers really help the bottom 50%?"

It's a very well written (as one would expect) and survey of economic issues surrounding the idea of greatly expanded taxation of upper income people to fund transfers. Go read it, I won't do it justice in a summary.

As Greg notes, much of the success of the 1% is not rent-seeking, nor inherited wealth, but entrepreneurs who innovated and got spectacularly wealthy in the process.

It's not clear how Steve Jobs getting hugely rich hurts the rest of us. (Greg makes a few jabs at financial profits, but readers of this blog know that's a more nuanced issue.) It's not clear how any of us even know if Jobs had $100 million, $1 billion, or $1 Gazillion when he died, though it makes a huge difference to measured inequality. And I like Greg's emphasis that it doesn't make much philosophical or moral sense to draw national borders around income-transfer moral philosophy. Look for the kidney story too.

Greg chose not to argue with the very tricky measurement issues, instead just quoting Pikkety and Saez' numbers. That's a good issue for another day -- other measures give very different results.

One of Greg's main points is that our inequality is the result of an interplay between supply and demand for talented skilled people.

I am more persuaded [than by Stiglitz] by the thesis advanced by Claudia Goldin and Lawrence Katz (2008)
in their book The Race between Education and Technology. Goldin and Katz argue that skill biased
technological change continually increases the demand for skilled labor. By itself, this
force tends to increase the earnings gap between skilled and unskilled workers, thereby
increasing inequality. Society can offset the effect of this demand shift by increasing the supply
of skilled labor at an even faster pace, as it did in the 1950s and 1960s. In this case, the earnings
gap need not rise and, indeed, can even decline, as in fact occurred. But when the pace of
educational advance slows down, as it did in the 1970s, the increasing demand for skilled labor
will naturally cause inequality to rise. The story of rising inequality, therefore, is not primarily
about politics and rent-seeking but rather about supply and demand.

Having stated it this way, I'm disappointed Greg didn't explore supply more. Why is it that America has not responded this time by increasing the supply of skilled workers? The obvious suspects are easy to name, and do not bode well for the left's suggestion that permaent confiscatory taxation plus transfers are the answer to the "problem."

Greg does a good job of painting the standard incentive problem with tax and transfer redistribution. However, he states it in its classic, static form. More transfers means less work effort. In reality, hours of work don't really respond that much, as there are only so many hours in a day and income and substitution effects offset. To make this come alive, we need to think harder about the margin of working vs. not working.

And investing. Here the two points come together, and I don't think Greg's article nor the literature put the pieces in one place. We need a dynamic perspective. If inequality comes from a mismatch between supply and demand for skill, then keeping the incentives in place to acquire skill is vital. If there is a strong income-based transfer scheme in place, yes, there is less incentive to work overtime. And yes, there is less incentive to work at all at least legally. But most of all, there is less incentive to go to school, to pick hard courses (face it, art history is a lot more fun than python and Java 101), pursue expensive advanced graduate education or innovate. One can imagine a spiral, or inequality laffer curve: Demand for skill outpaces supply, inequality rises, we put in place an income based transfer scheme, less people acquire skils, inequality rises...

Greg has a great section, "listening to the left" which I will now invite as well. Forget about the 1%. Pretend wealth grows on trees. Let's just think of the fortunes of the bottom 50%. Can we actually help them? Is there any historical precednent of a successful society that pays large means-tested amounts to young and working-age men and women, without destroying their incentives to gain skills and become middle class, to say nothing of the next Steve Jobs?

Social security doesn't count; the question is sending checks to young, healthy, but low-skilled working age people. Short-term doesn't count. I want to know of an instance in which, maintained over a generation or two, such a system did anything more than perpetuate an unskilled largely dysfuncitonal underclass, which achieved much more than reliably voting for politicians who endorse its transfers. (The model "send money to Democratic voters" does explain the proposed policies pretty well!) The reputed wonders of living in Sweden or other welfare states don't count: their benefits are in kind, and not means tested.

It's easy to come up with incentive-destruction horror stories, American welfare, European dole, and so on. Small cash transfers coupled with restricted educational opportunities and large labor market wedges, as faced by refugees and many European immigrants, seem particularly destructive. Tom Sowell writes whole books of examples. But it's too easy to listen to the choir. To those of you advocating large cash transfers, when has this ever worked? I'm curious to hear a clear historical precedent for the policies you advocate for the US.

58 comments:

You only mentioned the "Kidney story" offhand, but I found that to be a disappointing example on Mankiw's part. A reader of Rawls will quickly notice that liberty and self-ownership (over one's body) are given top priority. It is clear that Mankiw does NOT think the benefits of such a kidney transfer outweigh the costs (from a veil of ignorance initial point). Thus, he believes that the "social contract" does not involve such a kidney transfer and his problem with Rawls dissolves. Also, Mankiw incorrectly states that the people in the initial position have risk preferences; Rawls clearly says that risk-aversion is not a part of his argument.

You don't address what I understand to be the great insight of Mankiw's post. He is clear that economic technocracy is not enough for making policy prescriptions. Instead a healthy consideration must be made to questions of political and moral philosophy. I'm curious what the normative presuppositions of your own arguments are. I suspect you believe that "inequality" as a relative question is misleading, and that instead what matters is the wellbeing of the people. But why is that true? Do you have any particular moral attachment to property rights or capitalism (i.e. is capitalism morally necessary), or do you support property rights simply for their utility?

Sweden+Norway+Denmark+Netherlands are less populated than New York City. Just imagine, the whole North Atlantic Oil revenues and the like distributed among a few million people. Saudi Arabia also has a very generous welfare state for its citizens!As for Germany, I have my doubts. Whats their unemployment rate? Why is is that the population doesn't grow? Do ethnic minorities get the same opportunities?

As stated in the rules of the game, Sweden etc. don't count. They are welfare states which offer benefits to their populations, like day care, health care, university tuition, etc. largely irrespective of income. They forthrightly tax the middle class with 20% VAT and payroll taxes to pay for these benefits.

What's proposed on the left, and being discussed by Mankiw, is a big increase in marginal tax rates to fund means-tested checks. This is not about the wealfare state, it's about plain, tax-financed redistribution.

John, you are misrepresenting the left's position. What the left wants is to help the poor and the reason marginal tax rates are being discussed is that Sweden style welfare state is politically not feasible in the US, even though that is what the left prefers

Note that top marginal tax rates are also quite a bit higher in Sweden, Denmark, etc. than U.S. yet Sweden has more billionaires per capita than U.S. does. That should definitely count.

If what the left really wants is a Sweden-style welfare state, it follows that the left is opposed to lifestyle diversity. Sweden provides standard goods to everyone, and taxes the daylights out of individual choices to consume anything non-standard.

That probably is not, indeed, acceptable in the US, where the left has dedicated itself to the idea of lifestyle diversity.

"The reputed wonders of living in Sweden or other welfare states don't count: their benefits are in kind, and not means tested." Is there a post about in-kind benefits of Sweden or other welfare states? I'd like to learn more.

I am in favor of having a 1% if we had a truly "free market" economy. The problem is that we have accumulated a heavy legacy of special interests and artificial barriers which favor inverse flow of wealth. Regulations favor large corporate interests at the expense of small business ownership. The Fed's monetary policy of lately has also resulted in an indirect massive transfer of wealth from the middle class to the 1%. The 99% accepts this situation in return for unsustainably generous entitlements.

This cannot be solved with more "socialist" regulation like Obamacare. In fact, we need fewer regulation and a cleaning of the establishment in DC.

Haven't read Mankiw's paper yet, but based on your description it looks like it repeats many often-debunked fallacies. For example, we have extensive literature on the inequality that arises from differences in education. It can explain most of the inequality between the top 10% and the bottom 90%. The problem is that most of the inequality in the US--and nearly all the increase in inequality--is actually within the top 1%, and cannot be explained at all by education. John Cochrane is much better educated than both a walmart cashier and Steve Jobs. His income is much larger than that of the cashier. Yet the difference in income between John Cochrane and Steve Jobs is several orders of magnitude larger in the opposite direction.

And Mankiw's point about the run-up in education in the 1950s and 1960s is a case-in-point. Inequality between the 10th and 90th percentile--the portion of inequality explainable by education--hasn't actually budged since the 1960s. But over that period, the inequality between the 0.5% and the 99.5%--the portion that is uncorrelated with education--has skyrocketed.

It's true (and often ignored by politicians) that the big disparity is within the 1%. Thus, the left wants to jack up taxes on the top 10% or so, "because of the 1%". Yet, the bottom of the 1% are a lot closer to the median than the top of the 1% is to them.

That said, the top of the 1% comes from risk + luck. Should we confiscate those huge wins? It's tempting, but maybe not. Successful large businesses require people with high opportunity costs, people who often have (at least) top-5% jobs. If someone like that leaves such a job to start a business, they lose that job - and probably have little chance of ever getting another like it - and face the real prospect that the business will not succeed. I don't know about you, but I would have to be paid a fortune to take that risk. Since the average business pays closer to nothing, the ones that succeed must generate substantial wealth, or there will be no high-talent entrepreneurs. It could be argued that we should tax successful entrepreneurs and transfer the money to honorably-failed entrepreneurs, but of course there's the problem of identifying honorable failures, vs people who just wanted the transfer (failing is easy).

Didn't the GI Bill contribute pretty substaintially to the establishment of a large and prosperous middle class after WWII? Or does the GI Bill not count as a dangerous incentive destroying means tested wealth transfer?

GI bill also did not last generations. It paid for specific things like college education for a specific group, veterans. What's proposed here is a permanent large tax to finance permanent checks to anyone.

"Benefits included low-cost mortgages, low-interest loans to start a business or farm, cash payments of tuition and living expenses to attend college, high school or vocational education, as well as one year of unemployment compensation."

The number of people who took advantage of it was in the neighborhood of 6 to 7 million out of a total of 16.1 Million US Armed forces personnel. Since the Army was getting it's personal through conscription then you could argue that it was not toward any specific group.

It is also still on going under the "Post-9/11 Veterans Educational Assistance Act of 2008."

The decades of long-term welfare benefits to working age population have kind of worked in Northern Europe, at least until the immigration from different cultures mainly in form of refugees with no skills. The reason why it has kind of worked is the cultural homogeneity and large social rewards for work and productivity.

Take France, for example. The GDP per capita is maybe 20% below the US. However, the employed French work a lot less hours, at least by that 20%. If you look at anything in France just thru the lens of pecuniary incentives, it makes no sense, the whole place looks like an insane asylum. However, once the social incentives are taken into account, it starts making sense. A French CEO gets paid a fraction of what an American CEO gets paid, but he does get the best seat in the restaurant and laid like you read about it.

"Imagine that the government were to favor its political allies by granting them monopoly power over certain products, favorable regulations, or restrictions on trade."

Why do we have to imagine reality?

"In the end, I am led to conclude that concern about income inequality, and especially growth in incomes of the top 1 percent, cannot be founded primarily on concern about inefficiency and inequality of opportunity."

Professor,there is a ton of stuff that you pack in this column (and Mankiw packs in his paper for JEP). Where to start?

Ok, to start, let me ask this: Steve Jobs and Bill Gates and others have become spectacularly rich while innovating. Would they have innovated at the same rate, IF they had faced a marginal tax rate three times as high as they actually faced? Did anybody look at something like the "elasticiy of innovation with respect to changes in the mg tax rate"?

Secondly, let me play Devil's Advocate: you rule out Sweden or the Scandinavian Welfare State Model - why? That is the model that one would point to immediately, to give a reply to your question. But you preclude it from the outset. Why? You say benefits are in kind, so what?Now, Scandinavia does not have Steve Jobses, or Mark Zuckerbergs - it does not have innovators that revolutionize the world. But neither do New Zealand nor Australia, and Sweden and the Swedes seems to be very comfy with their very generous welfare state. Yeah, there were problems in the early 90s, but they were dealt with, and as a result, Sweden did not become a free-wheeling Capitalist Society - it still *is* a very generous welfare state, even after reforms.

Actually, Scandinavia has had revolutionary innovators - I give you Ingvar Kamprad (founder of Ikea) and (arguably) Jorma Olilla (transformed Nokia into the world's leading cellphone company in its time). Kamprad lives in Switzerland, and reputedly sheltered his wealth from Swedish taxes. His company relocated to the Netherlands. Olilla is currently chairman of Shell.

"Why is it that America has not responded this time by increasing the supply of skilled workers?"Because we don't have whole-brain emulations yet. After that labor will become another cheaply manufactured good which the industrial revolution has made bountiful. Right now it is rather expensive to produce a human, and the producers aren't even directly compensated. The most educated Americans have below replacement fertility. Rejiggering of tax & benefit policy isn't going to change that.

Bruce Kaufman has a paper that includes an explanation for why the participation rate is declining. The reason is that real wages are too low to cover social costs of labor. Workers just "go out of business".

Here is the link... (page 446, paragraph that starts "A shifting of social labor cost..."http://digitalcommons.ilr.cornell.edu/cgi/viewcontent.cgi?article=1458&context=ilrreview

We must keep in mind that labor has social costs. Society can meet those social costs through a combination of wages and transfers. But what is the optimal balance between higher wages or more transfers?

Last I checked, Republicans are the ones who want to means test social safety net programs (see the Romney-Ryan campaign). But what about food stamps in this country? Are you suggesting that cutting food stamps would lead to more young workers investing in skills? If not, at what point are transfers considered "large"?

"Is there any historical precednent of a successful society that pays large means-tested amounts to young and working-age men and women, without destroying their incentives to gain skills and become middle class, to say nothing of the next Steve Jobs?"

Greg is (and I am) perfectly clear about that. Bailouts no good. Alas, or perhaps fortuantely, the data say that most of the 1% wealth in the US still got it by innovating and starting great companies. The opportunities for rent seeking are increasing day by day however, and we'll see how long that lasts.

Of course, a society where you get great wealth by lobbying, government contracts, bailouts, and so forth, and then we pass a huge marginal tax rate on everyone including the last few entrepreurs to to to cleave some of that money back is hardly ideal.

Then you should be carving the bankers out of the 1% and acknowledging that they have not as a group created wealth over the last forty years, have in fact collectively destroyed enormous amounts of wealth, and could as a group be fairly reduced to penury by the claw back of the bailouts.

John, could the real story lurking in that data be an inefficient labor market? Mankiw suggests that because of Steve Jobs we have the iPod, but it seems impossible that Steve Jobs did 1000's of times more work than an engineer working several corporate levels below doing the real inventing. While Steve Jobs was a sterling example of someone leading an organization, it's not humanly possible for an individual acting alone to add billions of dollars of goods to the economy. Really, the entrepreneurs you mentioned, aided by corporate governance and an inefficient labor market, are winning a zero-sum compensation game with thousands of engineers and other workers--they are trillions richer, while the actual inventors are trillions poorer.

Frederic - I am going to disagree with you. The value that Jobs brought was vision and leadership and those were the things that created the value. The engineers working for Apple could as easily have been working for Motorola. What produced the value was the specification by Jobs of the problem to be solved. Larry Page and Sergey Brin are two individuals who pretty much by themselves created billions of dollars in value. The problem with the Mankiw piece is that he seeks to use a very few individuals who genuinely deserve wealth (even if I think they should be paying higher taxes) to justify the wealth of all the 1%. Wall Street bankers are not just like Jobs or Page or Brin.

But what about large cash transfers as a substitute for all the other "welfare" programs combined with an income tax that does not entirely reduce incentives through high marginal rates applied to transfer recipients who look for and take a job?

You're right to focus on incentives, but you assume that incentives is the only thing that matters. But don't you have to evaluate the net benefit which accounts both for reduced incentives AND improvement in whatever these means tested benefits are addressing ?

7 of the 10 richest Americans on Forbes 2013 list inherited fortunes in a country founded on a natural law (moral) philosophy that holds that there is no natural right to inherit or bequeath. Jefferson warned against the false aristocracy of nepotism and inherited wealth. He also proposed that the rich pay for the elementary education of the poor. Wotta socialist . . .

Mankiw actually provides a very interesting thought experiment at the beginning. Too bad, he did not follow through on it. Let's look at the entrepeneur having amassed large monetary wealth and created an imbalance in the society. First, apparently no one else shared his success which implies he did not pay increased wages. Second, the imbalance could easily be resolved by spending the profits from the invention to buy non-financial assets (house, car etc). The monetary distribution would have equalized but both parties would have aquired assets reflecting their difference in wealth. The problem is the entrepeneur will not spend but invest his financial asset. For ease of calculation let's assume he has $1 million invested at 7% APR while the rest of the population invests $10,000 at the same terms. After 10 years both have doubled their investment. Nevertheless, a difference of $990,000 has grown to a difference of $1,980,000. That additional money can only be coming from further redistribution from poor to rich and/or expansion of the money supply by taking on more debt. That is exactly what has happened during the last decades: Consumers (and government) taking on more debt which led to an expansion of monetary assets held by the rich. Given that mechanism proper policy would therefore be:- "mandate" an increase in wages- encourage spending by the 1% through higher taxes on capital gains

Why would the increase in an investment come from someone else. That is absurd. Investments increase because the company you have invested in has increased it's wealth. Wealth is created, it is not a zero sum game.

I'm not american, and I haven't lived in US in a long time, but I read an excellent piece about how increasingly difficult is to belong to the 1% in the american society (http://www.thenation.com/article/168265/why-elites-fail). It seems to me that Jobs and the others entrepeneurs listed in the cited paper are from a different generation, when social mobility was easier. Isn't this type of inequality something worth discussion? "Sending checks to young, healthy, but low-skilled working age people" is not going to solve anything(and I see a lot of this in Brazil), but straightly denying the access to the education that would provide the emergence of entrepreneurs from in all layers of society is also very problematic. This is something pretty big here in Brazil, and I don't know if a taxation directed to investments in education isn't something good...

I'm curious to hear a clear historical precedent for the policies you advocate for the US.

The answer is the U.S. The following chart is current personal transfer receipts less social security, medicare and unemployment insurance expressed as a percent of GDP. The bulk of those transfers are "means tested".

http://research.stlouisfed.org/fred2/graph/?g=jzT

There has been an upward trend in "means tested" transfers and the U.S. economy has done fine for the last 50 years.

Well, normally it would not be clear to me, but now I have passed most of my life and I can explain how. Steve Jobs getting hugely rich in and of itself is not a problem; the problem comes from what and whom they leave behind.

As you point out, what he owns is unknown, and as long as he doesn’t do certain things with it, your point stands in that on the whole it doesn’t matter. But lets look beyond the pebble that starts the ripples, and look at what kinds of ripples show up when such a big thing comes together.

Given space, I will just put it forth and I guess others will pipe in, or not, or ask, or not. But note, those that come after rarely are of the same caliber. They rarely have the same moral drive to succeed a certain way vs other ways, and often, structures start to exist that favor themselves and seek to stay where they are or climb by other means than what brought them there in the first place.

Oh depending on where you go, you can find all kinds of negative proofs of this. What I mean is that its often hidden but you will find showboaters and lectures and formal ways of stating it that isnt really looking at the details while each of the lecture areas is covering a facet of the same stone. (and trying to get smaller businesses to mimic them enthusiastically)

What starts to happen is that the clever systemizes start to see ways in which they can appear one way, but in effect take advantage of other things vs what a founder or such person would look askance at.

Hewlett Packard came in as a innovative cutting edge east coast electronics company, and ended up what after political correctness, and the ones that follow took over? A glorified printer company with the person who did that garnering a job at World Bank. Nice exit.

My career has taken me from fortune 10 companies, to large insurance rating bureaus, international paper, start ups, wall street, consulting, and the past 10 years in health care and education, and sadly the recent gallup poll on jobs and satisfaction is quite correct.

Amazing stuff which make reading academic explanations of things often sound quite silly and never noticing any common things that have been rife over a 30 year career in technology. Including the fact I did not want to ever work in technology but wanted to finish my Bronx science education. But that was in the 80s, when the press touted the inexplicable rise of the politically correct in college attendances. Classic story of child of immigrant studies while living in bad inner city Bronx neighborhood, gets into a prestigious school, and then… nothing in favor of the same kind of thing that made him a child of immigrant family. His son grows up, goes to school, is gifted, and honors, studies genetics, gets honors, then that’s it… cant do more… since I didn’t earn, or get a home, he has no means in this politically correct situation after the speech of the inequality in stem (which would not really reflect the genetics labs which I have friends in). Sis has a number of degrees, but she is what they call a protected class

Depending on where you work, it may be meritless business world where working hard is rewarded with no raises, and being told your “downgrading” others, and so making them unequal. Where all the thinking is done by a reserved few, and people are warehoused.

Hey… bet you don’t know why so many skilled out of work people cant start a company using things like the SBA… then again, maybe you do, but I would question your contemporaries knowing how the 8A program and all the politically correct stuff all around it makes betting on someone who has no access to that (and no assets to risk thanks to other similar programs), something that the bank manager explained isnt going to happen for most.

Would it be possible for you to comment on the more specific issue of the restricted set of individuals who are well thought of, educated, and experienced enough to lead, yet are nevertheless not sharing in the wealth a large organization creates in proportion to the select individuals, who with the aid of chance and favorable circumstances, find themselves calling the shots?

For example, a well run large multinational corporation will, by its nature, have more highly qualified, talented indiviuals aspiring to be the next CEO, SVP or VP than it will ever need. Yet the ones who are selected to lead will receive orders of magnitude more compensation than those reporting to them or to the people who report to them.

Why is it with only marginal differences between those at the top and the large number of qualified individuals seeking to replace them there should exist such non-linearities in pay given a supposedly efficient labor market? Does it really just come down to tournament theory?

Mankiw's example of CEO's being paid more in private companies than in public companies can also be explained another way.

Perhaps private company CEOs are paid more because there is less market discipline and transparency in private companies. Therefore, equity holders of private companies, even sophisticated ones, feel the need to provide their CEOs with more incentives (compensation) to keep their interests aligned.

I would like to ask for your help. I'm trying to understand and prove by myself every result there is in your book, but the continuous representation of asset pricing theory is a real problem to me. Could you help me by recommending a good introduction material?

I also would like to hear your advice: which software would you recommend to implement the tests proposed by Burnside (1994).

Write me back at my personal email address and I can send good materials. I'm putting together an online version of the class that uses asset pricing, and the first day lecture is how to do continuous time. That may be the best answer.

Professor Cochrane,I'm just wondering how you explain the fact that innovation was just as high if not higher (Tyler Cowen would say much higher) in the 1950s and 60s in America, at a time where marginal tax rates on the wealthy were much much higher than they are now? What are we getting in exchange for all this extra income going to the top?

Prof. Cochrane, more than Prof. Mankiw, points to a particularly pernicious aspect of US public discussion of the income distribution: It is made to seem as though the top 1% could be a source of free money for the rest. But politically, the rest that is important is the middle class, for that's where the votes are.

We could have a far more intelligent discussion of redistribution if we asked how much the top x% or should pay to the bottom y%. The middle class can pay its own way. When I was a kid, middle class meant you stood on your own two feet.

The standard negative view of Jobs, resisted by the acolytes, is the money was based on environmental and wage arbitrage, using asian resources to enhance profitability. Inspired salesmanship, less engineering(bought GUI didn't invent it). Leverage helped and probably should be taxed. There are probably some Bastiat unseens in the story. Does the electronics industry contribute to diabetes? What are the true energy demands? What are the externalities created by these entrepreneurs? Pigouvian tax? Apple is adding to global warming through Chinese coal power. No free lunch.

The corollary to the pestering "show me where it has ever worked" is for YOU to show that it has produced harm and cannot "work". I personally agree with taking caution when faced with such means tested wealth transfer choices. However, simply shouting over and over again "show me where it has worked", is a weak method of argument. It is useful only when rallying true believers who like such a bullying style.

I would encourage readers to very carefully consider the statement "much of the success of the 1% is not rent-seeking, nor inherited wealth". What does that even mean? The writer is claiming something about the "success" of the 1%. How do we measure this "success" in order to test the writer's claim?

It may seem the writer is claiming that most of the wealth of the 1% wealthiest households is neither from rent-seeking nor inherited wealth. Perhaps the intent is for the reader to believe that. But that is not what was written. Instead the statement is a non-testable declaration, since the very term "success" is presented in a vague manner.

Thanks to a few abusers I am now moderating comments. I welcome thoughtful disagreement. I will block comments with insulting or abusive language. I'm also blocking totally inane comments. Try to make some sense. I am much more likely to allow critical comments if you have the honesty and courage to use your real name.

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About Me and This Blog

This is a blog of news, views, and commentary, from a humorous free-market point of view. After one too many rants at the dinner table, my kids called me "the grumpy economist," and hence this blog and its title.
In real life I'm a Senior Fellow of the Hoover Institution at Stanford. I was formerly a professor at the University of Chicago Booth School of Business. I'm also an adjunct scholar of the Cato Institute. I'm not really grumpy by the way!